Sample Questions
Question 1
Easy
Under OBBBA, which of the following is true regarding the federal annual gift exclusion?
Solution
D is correct.
The annual gift exclusion mechanism (per-donee, per-year, inflation-indexed) is unchanged by OBBBA. The 2026 amount is per donee. Gifts at or below the exclusion do not use the unified lifetime exemption and do not require Form 709. The exclusion continues to be adjusted for inflation in increments roughly every two to three years.
The annual gift exclusion mechanism (per-donee, per-year, inflation-indexed) is unchanged by OBBBA. The 2026 amount is per donee. Gifts at or below the exclusion do not use the unified lifetime exemption and do not require Form 709. The exclusion continues to be adjusted for inflation in increments roughly every two to three years.
Question 2
Medium
The federal student loan interest deduction allows eligible taxpayers to deduct:
Solution
A is correct.
The student loan interest deduction allows up to $2,500 per year as an above-the-line deduction (available regardless of whether the taxpayer itemizes). The deduction phases out at higher MAGI levels. Both federal and private qualified student loan interest qualifies.
The student loan interest deduction allows up to $2,500 per year as an above-the-line deduction (available regardless of whether the taxpayer itemizes). The deduction phases out at higher MAGI levels. Both federal and private qualified student loan interest qualifies.
Question 3
Hard
A prepaid tuition 529 plan differs from a 529 savings plan primarily in that:
Solution
A is correct.
A prepaid tuition plan allows families to purchase future tuition credits at participating public institutions at today's prices, hedging against tuition inflation. If the student attends a non-participating institution, value may be limited. By contrast, 529 savings plans invest in portfolios with returns depending on market performance but can be used at any eligible institution for qualified expenses.
A prepaid tuition plan allows families to purchase future tuition credits at participating public institutions at today's prices, hedging against tuition inflation. If the student attends a non-participating institution, value may be limited. By contrast, 529 savings plans invest in portfolios with returns depending on market performance but can be used at any eligible institution for qualified expenses.
